Goldman Sachs took Libyan officials on a £22,000 expenses-paid trip to London

searingheat/FlickrA former Goldman Sachs salesman entertained three officials from Libya's sovereign wealth fund on a £22,000 ($29,000) expenses-paid trip to London in 2008 to help cement client relationships, a London court heard.

Goldman Sachs paid for the officials' accommodation, according to evidence cited by the Libyan Investment Authority's lawyer, as part of a two-week training trip with the bank.

Goldman Sachs became close to the LIA after Youssef Kabbaj, a former Goldman Sachs sales employee, was embedded within the organisation in 2007.

Kabbaj entertained the officials for a weekend during the London trip, which included an outing to the musical Chicago, a London court heard.

The LIA was set up in 2006 to invest Libya's oil wealth internationally. The organisation claims Goldman Sachs took advantage of the low level of financial literacy of LIA staff, and suggested large and risky trades that led to heavy losses for the Libyans and large margins for the bank.

The LIA is claiming it lost more than $1 billion (£750 million) on nine trades executed by Goldman Sachs in 2008 on banks such as Citigroup and UniCredit, as well as the French company EDF. The bank made more than $200 million in profit on the trades, exploiting the LIA's relative financial naivety, according to the LIA's lawyers.

Goldman Sachs has said it would defend against the claims "vigorously," calling them "without merit."

Philip Edey QC, the LIA's lawyer, questioned Goldman Sachs Partner Andrea Vella, the current co-CEO of investment banking in Asia and who worked on deals with the LIA in 2008, on whether it was normal for the bank to pay for the accommodation.

Chicago Reuters He cited an internal email from Michelle Pinggera, currently the bank's international chief of staff, to another Goldman Sachs partner asking: "Why are we paying for their accommodation, we don't normally do this so is there a reason for making an exception?"

Vella said he had seen banks pay for accommodation for client training guests "a number of times."

"I think I have seen a number of different formats of this, accommodation paid by Goldman Sachs, travel paid by them. I have seen that in the past. Throughout my career, that is," Vella said.

Edey asked whether Vella considered £22,000 as "an awful lot of entertaining during two weeks," adding that "everybody seems to have been submitted to Chicago" to which Vella replied: "I don't know the split of the £22,000 to see" how much the accommodation cost.

Goldman Sachs isn't the only bank to have wooed Libya's state investment fund with luxury travel. The court heard earlier in the dispute that LIA officials were offered tickets to Polo matches, and seats at the Rugby World Cup Final between 2007 and 2008 by financial firms trying to win their business.

Lehman Brothers offered VIP Cirque du Soleil seats while Commerzbank invited a senior official to a Euro 2008 match, giving an insight into how potential clients were treated by banks before the 2008 financial crisis.

Banks such as HSBC, SocGen and Bear Stearns also paid for stays at top London hotels and meals when providing training to LIA staff, according to the evidence.